Archive for April, 2011
There are multiple ways to divide up the costs of leasing a property and of course every one of the alternatives is utilized somewhere. This discussion is about the most common types of arrangements for dividing up the expenses.
A typical property has components of rent, property taxes, insurance, maintenance, utilities and common area charges (CAM). So how does one divide the costs?
Single Net Lease- The tenant pays rent plus property taxes
Double Net Lease- The tenant pays rent, property taxes and insurance
Triple Net Lease- The tenant pays rent, insurance, and maintenance. (This is often confused with an absolute net lease.)
Absolute net lease- Tenant pays rent plus all expenses including insurance, maintenance, utilities and common area charges.
Modified Gross Lease- The tenant pays rent, CAM and utilities. The landlord pays the rest
Gross Lease- the tenant pays rent and the landlord pays the expenses
Full Service Lease- Tenant pays insurance, plus excess utilities actually used over a base amount and increases in expenses over a base year amount.
Most sellers and brokers use a marketing process that contains a specific “Call for Offers” date upon which initial bids are due. The goal of this effort is to stage follow-up e-mails and calls to encourage all offers to be received at the same time. This creates a sense of urgency and allows for psychological leveraging. I personally, like to provide a sample letter of intent so that all offers are presented in the same format.
The ideal real estate investment broker needs to be equipped with all of the tools necessary to provide the client with a complete solution to his real estate capital needs.
However, achieving that ideal has been elusive because there is an inherent conflict between debt and equity brokers. Simply said, the equity broker is programmed to seek a sale of the asset from the client while the debt broker would rather that the client refinances that very same asset. What is lacking here is a protocol that is in the best interest of the client which is identified before the debt and equity brokers begin selling their services. More >
NAI Global, the world’s premier global network of commercial real estate firms and one of the largest real estate services providers worldwide, today announced Greg Schecher has joined its Capital Markets group as Senior Vice President, Finance.
Note sales – more irrational exuberance!?!? Like most things in a relatively free market environment, prices of goods and services flow through the spectrum of balance and imbalance as the pendulum swings, oftentimes too far to the extreme. This creates opportunities for both buyers and sellers before settling, albeit briefly, in a balanced state. The note sales environment is firmly in that cycle today.
But why? I have seen countless examples where the notes secured by commercial real estate have traded for values that exceed the More >